Ask Paul: Should I rebalance my super on my own?


Dear Paul,

I'm older than 60 and drawing on my superannuation to top up my income. 

I chose a mix of asset classes in the pension phase account that I'm drawing on. The fixed-income portion was withdrawn first and is now used up (the total balance is still more than 
it started with, happily). 

ask paul should i rebalance my super on my own

My super fund gave me the option to rebalance the account on July 1 so that the different asset classes are in the same proportions that I originally chose.

I ticked that box, but have since been wondering if maybe that's not such a good idea. Most of the remainder is in various share-type assets and if the market's down on July 1, I'll just lock in losses. 

Would it be better to do it the hard way by doing my own rebalancing: for example, rebalancing once a month as a type of reverse dollar-cost averaging, or at least trying to avoid July 1 if it's low?

Thanks for your help. I'm an avid reader of Money and your column. - Ruth

Your question is an interesting one, Ruth. It takes us to one of the key issues in investment. Do we try to 'time the market' or let 'time in the market' do the heavy lifting for us?

After more than 40 years in the world of money, watching people's behaviour and the results they get, I am very much locked into what I learnt at university and in my early days as a researcher: those who spend 'time in the market' do best.

We all read expert opinions and are influenced by them. If we go back to what 'experts' were saying at the start of 2023 about the year ahead, we can easily find some predicting doom, gloom and a market crash. Others predicted a boom.

Of course, we got some of both. The market had a big dip into September, then a strong run upwards from the end of October. As I write this in early April 2024, sharemarkets have had a great run.

So, like all of us in growth- or balanced-type funds, my super was down from January 1 to September, then, thanks to the big jump, it ended up returning about 13% for 2023. Seriously, who would have had the first clue!

What I do know is that we are humans driven by emotion, fear and greed. At 68, I'm a little older than you, but I know what I would do in your shoes.

If your asset allocation - that is, your spread of money between asset classes - is right for you in terms of your risk profile and your objectives, I'd stick with it and rebalance. Rebalancing is fantastic.

It takes the emotion out of investing. It makes you sell investments that have done well and reallocate your money.

Dollar-cost averaging is also a proven strategy. It forces you to buy more at lower prices and less at higher prices. I'd like you to be an investor, not a punter, so go with proven logic.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Peter Kershaw
May 1, 2024 5.47pm

It's good to have a healthy superannuation but on one's passing you pay a ( death tax ) of 17% which you have been taxed already.

Do you think it's fair and legal for them to tax you on your death?

S Des
May 2, 2024 1.04pm

Its taking the tax to the 30%-32% mark for your children (not spouse).if you are concerned, I would withdraw from the taxable super account and start a new "tax free" super account, which essentially means you are "moving" from pretax to after tax account. Money there is considered post tax and will not be taxed on your death

Katherine Mahon
May 8, 2024 10.04pm
Sharon Vandenhurk
May 1, 2024 11.35pm

Hi Paul,curious to know if I should role my super into investment with the super I am with.Nearly 58 years?Or just leave it as it is,putting my contribution in and also my works contribution.